Eli Lilly falls on fears of drug delay

JennySpitz

SAN FRANCISCO (CBS.MW) -- Shares of Eli Lilly fell 7 percent Wednesday after the drugmaker received conditional approval for a drug, falling short of final acceptance by the U.S. Food and Drug Administration.

The stock declined $4.70 to close at $62.10.

Indianapolis-based Eli Lilly
LLY, +0.56%
is trying to get approval for duloxetine to be used to treat stress urinary incontinence, or SUI, which the company says affects one in three women in the U.S. If approved, duloxetine would be the first pharmaceutical treatment for SUI. But the conditions laid out by the FDA Wednesday could delay the drug's final approval.

The FDA is demanding the completion of additional studies on the drug, the resolution of manufacturing issues at an Indianapolis plant and complete negotiations on the drug's labeling.

Duloxetine is also under review by the FDA for treatment of depression under the brand name Cymbalta.

Lilly said it intends to hold discussions with the FDA regarding its plans to provide the information that was requested so it can better estimate the timing of a potential U.S. approval date. The company is forecasting approval in late 2004 or the first half of 2005.

After Lilly's announcement, First Albany analyst Adam Greene reduced his 2004 earnings per share estimate for the company to $2.96 from $3.02 and also cut his 2005 projection by 5 cents to $3.54.

"Although Lilly has yet to turn the corner, we believe the turnaround will happen; nevertheless, this news questions the timing of this recovery," Greene wrote.

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